Why does the Per Diem Allowance not have the Tax checkbox ticked?
You might have noticed that the Per Diem Allowance under the Recurring and Adhoc Payment/Deduction tab in our system only has the CPF checkbox ticked, and not the Tax checkbox.
That's because, by default, our Per Diem Allowance pay item is non-taxable. However, this allowance is quite special, and whether it's taxable or not depends on the situation.
Should the Per Diem Allowance be Taxable?
To determine if your Per Diem Allowance should be taxed, you can refer to the guidelines set by IRAS and CPF:
If the "Per Diem Allowance" exceeds the acceptable rate according to IRAS then the pay item is taxable: https://www.iras.gov.sg/taxes/individual-income-tax/employers/understanding-the-tax-treatment/per-diem-allowance
For CPF payable, per diem allowance is subject to CPF contributions by default: https://www.cpf.gov.sg/content/dam/web/employer/faq/employer-obligations/documents/Which_allowances_and_payments_attract_CPF_contributions.pdf
How does Talenox handle Per Diem Allowance by default?
“Per Diem Allowance” under the Recurring and the Adhoc Payment/Deduction tab will have only the CPF checkbox ticked and not the Tax checkbox.
Currently, our "Per Diem Allowance" pay items in the system are non-taxable as a default.
How Should I Proceed with Per Diem Allowances?
To proceed with Per Diem Allowances, there are two options available.
The first option is to create two lines of Per Diem Allowances and tick the Tax checkbox for the first pay item, untick the Tax checkbox on the second pay item, and include a remark in the Remarks field before processing.
The second option is to create a Custom Pay Item of Per Diem Allowance (Taxable) to differentiate between pay items in the list during payroll processing.
The guide to creating custom pay items is available here:
We hope this helps! If you need further clarification, please refer to IRAS' FAQ clarifications on the tax treatment of Per Diem Allowance.